My billion-dollar patent lesson

They say the best lesson an entrepreneur can learn is one that hurts his professional pride. If that’s true, I can safely say that the lesson my first tech venture taught me was as painful as it gets.

“Intellectual property is one of the most valuable assets a company owns and it should be protected at all costs”

I was heading up Border Network Technologies and the co-founders and I were developing an application firewall. To differentiate our company from existing firewall vendors we needed to make hundreds of PCs appear to the outside world as if they were one machine.

Today that technology is referred to as Network Address Translation (NAT) and is widely used throughout the computing industry. We saw it as a necessity; we didn’t realize it was an industry-changing idea.

Needless to say, lack of funding and foresight cost us plenty. I still say that if we’d simply filed that patent, we could be billionaires today. But, back then we were focused solely on building Border into a going concern, filing patent applications was low on our priority list. There simply wasn’t enough time or money. It’s obvious now that we should have made room for both.

At NEVEX (my current venture), our CTO Rayan Zachariassen handles patent management. As he puts it in the video below: “NAT is a feature that’s been in every router sold in the past 10 to 12 years. We learned a hard lesson at Border and in subsequent companies we’ve put emphasis on protecting our technology. NEVEX currently has one regular patent application and three provisionals.”

Provisional applications for the US market came into being in 1995 and are relatively inexpensive; you are allowed up to a year’s grace to think through whether the idea is truly worth patenting. That being said, you may want to file a regular patent application sooner than that if you suspect others may be filing for a similar technology. For a deep dive on filing provisional applications, visit www.ladas.com/Patents/ProvisionalPatentApps.html.

Consider my story a cautionary tale: intellectual property is one of the most valuable assets a company owns and it should be protected at all costs. If you’re wondering whether your idea is worth patenting, here are a couple of thoughts:

• How broad is the idea’s commercial value? If it’s broad, I recommend you file as soon as possible. Delaying this only increases the chances of another company filing a patent before you do. Remember, unique ideas are rare. Chances are someone else is developing a similar innovation.
• Is your idea a narrow, niche play, or could it gain mainstream adoption? If the latter, I recommend to broaden the patent application so as to protect as many angles of innovation as possible.

Although it takes a lot of time and money, proper patent management is one of the keys to success in the tech world. I could be writing this post from my own private island in the Caribbean if someone had passed along this advice years ago. Maybe I should patent my advice.

As a long-time serial tech entrepreneur, Steve Lamb has been involved in the development of several fast-growth technology firms. Now, Steve is building MaRS-based NEVEX Virtual Technologies into a business application acceleration powerhouse, helping enterprise overcome lost productivity challenges as a result of poor software performance. See more…